China has a grand plan to develop global infrastructure as a smart power move to expand its sphere of economic influence. The One Belt One Road, or OBOR in short (or The Belt and Road Initiative in Chinese) is a plan for investment in nearly 70 countries announced by the Chinese government under President Xi Jinping at the 2013 Association of Southeast Asian Nations (ASEAN) summit.¹ The aim is to promote China as the centre of economic, political and security interdependencies by enhancing connectivity and cooperation among intercontinental countries.
Smart Power is the balance of hard and soft power.
One Belt One Road explained
China's Belt and Road Initiative project has two components: The Silk Road Economic Belt and the 21st century Maritime Silk Road. Chinese concepts do not translate well into literal English!
The 'Belt' is a network of roads, and the 'Road' is a sea route.
The Silk Road Economic Belt is a series of 6 land-based economic corridors consisting of railroads, oil and gas pipelines and a high-speed train network between China, Central Asia and Europe. The Maritime Silk Road consists of three chains of seaports from the South China Sea to Africa.
The Eurasian Land Bridge will connect western China with western Russia, essential for China's energy security.
The China-Pakistan Corridor will connect southwest China to Arabia sea routes via Pakistan, at a cost of $46 billion.² Increasing Sino-Pakistani relations anger India thought to be moving closer to United States.
How many countries are involved in One Belt One Road?
According to the official list, the OBOR project has 137 countries, but the criteria for participation is vague and not legally binding.² Other online articles often state that 78 countries are involved.² This contradiction sheds light on the problem with the large-scale global grand plan: How will China achieve its goal?
Early stages of the project have already been completed, such as in Kenya. A flagship OBOR project in East Africa is the railway link between Mombasa and Nairobi, the biggest investment in Kenya since the country's independence. Kyrgyzstan and Tajikistan have welcomed the project or any other significant investment with open arms, being among the first countries to join the project.
Central Asian countries are economically isolated from their neighbours as represented by intra-regional trade as a mere 6.2% of cross-border commerce.³
What are the aims of One Belt One Road?
China hopes the One Belt One Road (OBOR) will boost its domestic growth and use this opportunity to invest in other countries as a sign of economic diplomacy. It is touted as a regional economic development project. However, such a network could expand the international use of the Chinese yuan and reduce American dollar hegemony.
Economic diplomacy is a term used to describe the economic activities between two or more countries for mutual benefits, such as increased economic interdependence (a sign of globalisation). It includes donations following a natural disaster. One party can gain a greater advantage from an agreement. It is a form of international relations and part of the foreign policy of many developed countries, but must be viewed with caution due to possible future geopolitical tensions.
Domestic growth
Creating new trade routes, including port access, can promote domestic growth. It will redirect international trade flows and help China avoid increasing tariffs imposed by the United States under its former president, Donald Trump. 50 Chinese state-owned enterprises will complete 1700 new infrastructures in Africa listed in OBOR under China's policy to employ Chinese labour.³ Chinese state-owned enterprises have announced plans to buy or secure majority stakes in Chinese-built ports.
Economic diplomacy
Economic diplomacy plans include new trade routes that will also open up new markets such as exporting construction materials to East Africa. According to President Xi Jinping, 'inadequate infrastructure is the biggest bottleneck to Africa's development'.³
Infrastructure is built with low-cost loans to participating countries from China. There are fears that the borrowers will not be able to repay China, but some critics claim that this was the plan all along.
Sri Lanka defaulted on an infrastructure loan in 2017 and had to hand over the Hambantota port to Chinese state-owned companies under a 99-year lease.³
Pakistan handed over Gwadar port on a 40-year lease.²
The String of Pearls geo-economic strategy suggests this, whereby China is seeking to acquire strategic assets rather than repay its debts. By acquiring strategic assets, Shina can take control of regional chokepoints in its trade routes (This is a part of a sea route controlled by another country. Trade can be 'choked off' at this point in the route).
From where does OBOR's funding come?
Policy lenders provide funding and base their lending decisions on presidential and geostrategic influences. This group includes the China Development Bank and the Export-Import Bank of China (Exim Bank), which have committed more than $1 trillion. The Silk Road Fund has $40 billion in investment funds. China's Central Bank oversees it.² The Asia Infrastructure Investment Bank, whose remit now includes Africa, has $100 billion in capital.
Why is OBOR important to China's development?
China's recent growth has peaked. Further development of its spheres of influence (economic, military and political) requires collaboration with friendly countries for mutually beneficial projects.
The middle-income trap describes how wages and thus the quality of life improves when low-skilled labour production increases but countries struggle to move into the higher-value tertiary sector.
Economic | To address the ticking time-bomb of the middle-income trap. China has emerged as a superpower with its large labour force offering cheaper manufactured goods. |
To overcome potential chokepoints in shipping routes. China currently moves more global cargo than any other country but relies on free movement in maritime chokepoints. Reducing the risk of maritime chokepoints will support the continued expansion of the China Ocean Shipping Company, which is currently the fourth largest shipping fleet in the world. |
Military | To defend against neighbours ('frenemies'). China is also involved in territorial disputes with neighbours such as Japan, Taiwan, and the Philippines. OBOR is positioned to bypass potential chokepoints and divert to Chinese-built ports along the Pakistan-China corridor. These include Djibouti, Walvis Bay (Namibia), Gwadar (Pakistan), Hambantota (Sri Lanka), and Piraeus (Greece). This is part of China's 13th Five-Year Plan of 2016. It is estimated that China has battleships and submarines in the Indian Ocean that will meet Indian fleets in the future due to increasing Sino-Indian rivalry. |
To have strategic pawns in Africa. Investment in Africa strengthens economic ties between the two countries. Moreover, the Chinese-owned ports are strategically located to promote trade and serve as bases for Chinese naval fleets. These ports are in close proximity to the European market. |
Political | To achieve Euro influence. Some claim that China uses OBOR to gain access to the European market in the future by focusing its financial resources on the Balkan countries well on their way to becoming EU members. |
To maintain President Xi Jinping's power in China. If OBOR is a success, support for President Xi Jinping in China will improve within the Party at home. |
To promote cultural influences (soft power). Countries to participate are expected to adopt China's stance on education and gender equality in the Health Silk Road and Digital Silk Road. This might not be a bad thing as China has seen a 50% increase in gross enrolment in the tertiary education level since the country opened up 20 years ago. |
What are the problems that OBOR faces?
Criticisms of One Belt One Road focus on China's aggressive nature to become a rising superpower today. Some of the problems are:
- Whether China is setting a debt trap for borrowing governments.
- China's attitude to privacy and liberalism.
- China's attitude on climate change.
Debt sustainability
Similarities exist between the publicly despised IMF debt for emerging markets and the economic sustainability of China's new debt. Debt from OBOR projects has grown to more than 20 times the country's GDP, and governments have taken on more debt to pay it off.³ In addition, cheaper Chinese materials have been offered at more competitive prices than local exports from countries participating in OBOR. For example, in 2017, Kenya's cement exports declined due to the influx of Chinese overcapacity to Tanzania and Uganda. At the same time, OBOR policies provide for Chinese labour to be favoured over locals for construction and infrastructure contracts. The lack of new jobs has generated hostility in participating countries, including Ethiopia, Kenya and Tanzania.
Security and intelligence
The China-Africa Action Plan states that security for Chinese nationals, businesses and major projects requires cooperation between local intelligence, military and police. Uganda had to deploy its military in 2018 to protect against attacks on Chinese nationals by locals.³ The line between public and private enterprises is blurred under Chinese law. China's rivals are concerned about OBOR's increasing efforts to gain global political influence. For example, OBOR projects employ 3000 former military personnel.
On the other hand, rivals such as India and Japan often use infrastructure construction as a strategy of economic diplomacy. These countries have agreed to participate in OBOR. Hillman of the Center for Strategic and International Studies suggests that the United States use OBOR projects as a way for China to pay for infrastructure projects but only if they are also in U.S. interests.
The United States must deepen its relationship with Asia to maintain its hegemonic status. Among the attempts is the Trans-Pacific Partnership, which former U.S. President Barack Obama proposed but President Trump rejected. President Trump has instead proposed the BUILD Act and the Overseas Private Investment Corporation to protect American manufacturing jobs.
Climate change
It is reported that 85% of OBOR projects are associated with high levels of greenhouse gas emissions.³
Case Study: One Belt One Road and Afghanistan
Opportunities
Afghanistan hosts many rare earth metals that China is eager to exploit. Current Chinese projects in Afghanistan, such as the 2011 Amu Darya oil field and the 2008 Mes Aynak copper mine, have not panned out. The country also shares a border with China that could serve as a base for future attacks.
The Taliban in Afghanistan has signed OBOR projects for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project. So, there is a lack of trust between Pakistan and Afghanistan as long time hostile neighbours. If trade between Afghanistan and Pakistan booms, the existing political tensions could diminish.
Threats
No transportation or pipelines for natural gas can be established in a war-torn country. Afghanistan is the biggest risk in this project. Other projects have faced many construction limitations due to terrorism, political instability, and the climate and geology in Afghanistan. The China-Pakistan Economic Corridor, which is central to the OBOR, has been halted.
The threats to the country from ISIS and other militant organisations continues. The U.S. military withdrawal from Afghanistan makes us all uneasy about the Taliban's ability to maintain peace in the country, which is essential for economic development. Given the other rivalry between the United States and China, it is unlikely that they will work together to secure peace in Afghanistan. Some suggest that China will take the place of the United States in the country. Although the Taliban call China Afghanistan's 'main partner', there have been several attacks on Chinese workers in 2021, including suicide bombings. (4)
Is One Belt One Road a success?
OBOR is an ongoing project, but in recent news, you may have heard about the slowdown in Chinese growth, including problems with Evergrande's infrastructure investment. The debt of some OBOR borrowers exceeds their GDP, and repayments are less likely to be a source of revenue for China. While this could be beneficial to the project's long-term plans (under the String of Pearls theory), it will tarnish OBOR's reputation with new participants. Awareness of the risks of such projects has increased. Malaysian electoral representatives won based on an anti-OBOR stance. (4)
On the other hand, OBOR has reportedly only been involved in smaller loan projects recently, focusing on repayment. This reflects the current downturn in China's economy or results from changes in the perception of OBOR by other countries.
Brands have also misused the OBOR name, such as major infrastructure like the Anaklia Port in Georgia, in which China has no stake, calling themselves part of OBOR. In 2019, China created an official list of participating OBOR nations and approved projects. This is the first step in approaching authenticity and regaining control of the global grand plan of OBOR.² OBOR is possible, but far from being accomplished (if it ever is).
Chinese One Belt One Road - Key takeaways
The One Belt One Road, or OBOR in short, or The Belt and Road Initiative in Chinese, is a global infrastructure project proposed by China to place the country within the protected road and sea networks.
It consists of two components involving 137 countries: The Silk Road Economic Belt (a road network) and the 21st century Maritime Silk Road (a bunch of sea routes).
It is necessary to push forward China's future economic and political development by expanding domestic growth and improving economic diplomacy.
Participating countries are increasingly concerned about debt sustainability and the blurring line between Chinese public and private enterprises.
As a result, the project still has a long way to go.
¹JJ Soong, China's One Belt and One Road Initiative Meets ASEAN Economic Community: Propelling and Deepening Regional Economic Integration?,
The Chinese Economy, 1 February 2019
²Wade Shepard, How China is losing Support for Its Belt and Road Initiative, Forbes, 28 February 2020
³Paul Nantulya, Implications for Africa from China's One Belt One Road Strategy, African Center for Strategic Studies, 22 March 2019
(4) Magnus Marsden, China, Afghanistan, and the Belt and Road Initiative: Diplomacy and Reality, Diplomat, 15 September 2021
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